Moody’s Investors Service ("Moody’s") has today changed the Government of Iceland's sovereign rating outlook to positive from stable and affirmed Iceland’s A3 long-term issuer rating. The government's long-term senior unsecured debt rating of A3 and the (P)A3 and (P)Prime-2 ratings assigned to its medium-term note (MTN) programme have also been affirmed.

The key drivers for the change in the rating outlook to positive from stable are:

Anticipated further improvement in the government‘s debt metrics beyond what was previously expected.

The positive outlook also reflects progress made in the past two years on the major preconditions we laid out at the time of the upgrade to A3 in September 2016, including the smooth removal of capital controls and the settlement of the offshore krónur situation.

Today, rating agency S&P Global affirmed its long- and short-term foreign and local currency sovereign credit ratings on the Republic of Iceland as A/A-1 with a stable outlook. According to the rating agency this rating reflects the country’s strong institutional framework and general policymaking effectiveness, comparatively low net general government debt at 30% of GDP and high per capita income levels. The rating agency also said that the ratings are constrained by Iceland’s vulnerability to external developments as well as typically high volatility throughout the economic cycle in addition to risks stemming from overheating in the domestic economy.

According to S&P the stable outlook balances the risks stemming from the domestic economy overheating against the potential for more rapid improvements in the government and external balance sheets over the next few years.